John Lewis Partnership has managed to slash its losses from £635m to “just” £29m in the first half of its financial year, thanks in no small part to the expansion of its digital strategy, but has warned of “significant uncertainty” over the key festive period.
The partnership, which owns John Lewis and Waitrose, admitted it had benefited from £58m of business rates relief but paid out millions of pounds in redundancy and property closure costs.
Last year the retail giant nosedived £635m into the red when it wrote off nearly £500m from the value of its department stores. It also made the unprecedented step of scrapping its annual staff bonus this year and has said it will not pay out again until annual profits exceed £150m.
The group has benefited from its significant investment in online shopping, with sales rising 6% to almost £5.9bn in the first half to July 31, despite high street lockdowns and the permanent closure of 16 department stores and several supermarkets.
Sales at Waitrose rose 2% year on year and were 10% higher than pre-pandemic levels, largely driven by online growth. John Lewis’ department store sales rose 12% compared with the same period last year, and were 1% better than pre-pandemic levels.
However, Sharon White, the chairman of the John Lewis Partnership, said: “As we look ahead, there is significant uncertainty. Like the whole of retail, we are managing global supply chain challenges and labour shortages. We are seeing inflationary pressures, which we expect to persist.”
And Samantha Mansfield, head of strategy at Merkel-owned LiveArea, reckons the sales growth proves the value of an effective digital strategy in times of grave uncertainty.
“With significant investments into online offerings, the high street stalwart was able to reduce losses despite continued disruptions to business operations. Cutting stores nationwide in March has paid off for the retailer. For most, the days of operating bricks-and-mortar only are gone.
“The pandemic forced a change in mindset for retailers where digital is now the priority. As we enter into the colder seasons with ongoing supply chain issues and labour shortages, retailers need to ensure they have a strong online presence supported by select stores in defined regions. The future of the high street is constantly under question, but there is little doubt digital is here to stay.”
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